Health Tech: Francisco’s Bswift buy

When Andy Slavitt launched Town Hall Ventures four years ago to transform care delivery in underserved communities, he didn’t know if such companies were out there — or if the capital would follow. Now he does, Sarah writes.

Why it matters: Town Hall Ventures just raked in $350 million for its third vehicle, validating what Slavitt believes is growing investor recognition of the needs of marginalized populations — whether that’s maternal health in the Medicaid community or “deaths of despair” from the lack of mental health access.

What he’s saying: “People no longer think we are nuts,” after seeing the successes of locally driven Town Hall portfolio companies that have scaled, like Cityblock Health, Equality Health and Landmark Health, Slavitt tells Axios.

• That success has prompted “mainstream” investment around health equity, he says, yielding a number of emerging competitors to Town Hall portfolio companies.
• “When they started they were kind of the only game in town,” Slavitt says. “In my mind, that is the beginning of a shift of progress in the industry.”

Between the lines: “Our goal isn’t just to put our 350 million dollars [to work],” Slavitt says. “Our goal is to attract billions and billions of dollars by nature of these companies.”

Zoom in: Slavitt, who was the acting administrator of CMS under President Obama and spent a decade at Optum, says health care incumbents “like to create new creative competitive things and then the innovation doesn’t travel well.”

• To facilitate more rapid transformation, innovation needs to spread — and that means both mainstream health care players and entrepreneurial companies like those in Town Hall’s portfolio need to be more accommodative to partner, he adds.
• “If [the innovation] it’s owned outside of their four walls, it actually works,” he says. “I use my history in this to push them [incumbents].”

Context: With a fresh pool of funds available for investment, Town Hall Ventures is focused on issues in need of major progress, like…

• Teen mental health, rural health, maternal health and senior care.

Slavitt’s big picture: “The closer you get to these communities, the more you see the desperate need for problems to be solved.”

Details: Town Hall Ventures’ new $350 million fund is its largest to date, with Fund I and Fund II collecting $115 million and $270 million, respectively.

• The firm now has over $1 billion in assets under management, and Fund 2 has finished making new investments but has “significant” reserves to support existing investments.
• The larger pool of capital gives it more capability to write follow-on checks, and Slavitt expects to inject as much as $30 million to $35 million into its companies over their life span, he says.
• The firm simultaneously named Meera Mani partner, from McKinsey & Co, where she built the firm’s Medicaid practice.
• Town Hall Ventures named Matt Tesarfreund vice president; David Ohta associate; and Christine Gosioco associate. Hui Cheng and Robby Fuentes were promoted to vice president.